Incentives and Cheating

People amaze me when they talk about not understanding why athletes cheat. Many of them think they play for the love of the game (even the beautiful game), but few realize that they are responding to incentives. If undergraduates (and graduate students) are willing to cheat in order to gain 5 extra bonus points, then athletes will surely cheat to gain a few million dollars. Each sport has some economist (myself included) that try to estimate the value of different productivity measures. For soccer, goals and assists are valued heavily (paper forthcoming). In baseball, you may recall the phrase "chicks dig the long ball," and it's true!

So when you hear stories of steroids, blood doping, or oxygenation, just remember it's because sports consumers (you!) value these things. The large tv and incentive based contracts all revolve around a simple 101 lesson: incentives. If you think sports are immune, look around your own life.

Economics of the Olympics

Many people around the world are jumping for joy at the proceedings of the 30th Olympiad, and for good reason! This marks the first time in Olympic history that every country participating has sent at least one female representative, as well as the first time that females outnumber the male participates for the USA (LA TIMES). These countries include Brunei, Qatar, and Saudi Arabia. In my mind, it's still interesting that Qatar bid for the 2016 Olympics considering that women would need to compete and the country is only just now sending female participants.

But I digress. If you're interested in seeing the effects of the Olympics on countries' GDP, most would be surprised to find that it either has no effect or negative effects. Why you ask? Well, government spending increases substantially prior to the actual games with the building of stadiums, road improvements, and even security. However, once the games are over, the government cuts back substantially. This shock sometimes sends countries into a frenzy. For an interesting look at the "Post Olympic Effect," check out this piece by the Federal Reserve Bank of San Francisco (PDF). Oh, and Go Team USA!

Does Defense Win Championships?

A great post from the guys over at Freakonomics:

http://www.freakonomics.com/2012/01/20/does-defense-really-win-championships/

The answer may surprise you!